Jakarta. The establishment of Indonesia’s first bullion bank will provide a Sharia-compliant savings method for the country’s predominantly Muslim population, Chief Economic Minister Airlangga Hartarto said on Tuesday.

The government plans to launch two bullion banks, which will offer financial services backed by precious metals such as gold. The official inauguration, attended by President Prabowo Subianto, is set to take place next week.

According to Airlangga, bullion banking aligns well with Islamic financial principles, making it a viable option for saving for Hajj pilgrimages or other financial needs.

He described gold as a safe investment, similar to the US dollar, but with key advantages.

Gold offers a steady increase in value and reliable returns without relying on bank interest, which is prohibited in Islamic finance.

Additionally, he noted that gold is free from currency fluctuations, making it a more stable asset in uncertain economic conditions.

“We need to start using gold as a savings method, especially for religious purposes. When Indonesian Muslims plan to perform Hajj, they need to save money -- and gold could be a smart part of their savings strategy,” Airlangga said during the Indonesia Economic Summit in Jakarta.

The two bullion banks will be operated by Bank Syariah Indonesia (BSI) and state-owned pawnshop company Pegadaian, with financial backing from Bank Rakyat Indonesia (BRI).

Economic Independence
Indonesia is among the world's top gold producers, with significant mining operations in Papua, North Sumatra, and West Java. However, much of its gold trading and storage has been conducted overseas, primarily in Singapore and Switzerland.

According to Airlangga, Indonesia produces up to 60 tons of gold annually, and the government is now focused on gold industrialization, aiming to produce high-purity gold bars that increase economic value and support the domestic financial system.

By establishing its own bullion bank, Indonesia aims to reduce dependency on foreign markets and create a more self-sufficient gold ecosystem.

The bullion bank will allow domestic gold deposits to be managed within the country instead of being stored abroad. The initiative aims to strengthen Indonesia’s gold reserves, enhance the domestic gold trading system, and reduce reliance on foreign institutions.

The government also believes that robust gold reserves will help strengthen the local currency.

Earlier, Bank Indonesia Governor Perry Warjiyo confirmed that the central bank is working with the Financial Services Authority (OJK) and the Indonesian government to set up the bullion bank.

The plan follows President Prabowo’s directive to enhance Indonesia’s financial sovereignty by maximizing the potential of its gold and precious metal reserves.

In the global financial system, bullion banks play a crucial role in gold trading, storage, and financing. These institutions facilitate gold transactions between central banks, mining companies, refiners, and investors. Major bullion banks such as JP Morgan, HSBC, and UBS operate in the London Bullion Market Association (LBMA), the world’s largest gold trading hub. 

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